Intellectual Capital, Absorptive Capacity and Innovation Capacity in Startups in Brazil

ABSTRACT This research aims to examine the association between intellectual capital, absorptive capacity and both incremental and radical innovation in startups. The empirical relationship between these constructs has yet to be extensively studied, particularly within emerging economies. This study surveyed 407 managers of startups within an innovation ecosystem in Brazil. The validity of the constructs and the theoretical model was confirmed through structural equation modelling. The results indicate that human, structural and relational capital (intellectual capital) are positively associated with a company's ability to acquire, assimilate, transform and exploit knowledge at varying intensity levels. Relational capital demonstrated the strongest association with absorptive capacity, followed by structural and human capital. Furthermore, potential absorptive capacity was found to influence realised absorptive capacity. Potential absorptive capacity directly impacts the capacity for incremental innovation; however, without the complement of realised absorptive capacity, it does not affect the capacity for radical innovation. This research contributes to addressing the research gap concerning these three constructs in startups. Our findings can assist managers in formulating policies and strategies aimed at fostering innovation by identifying resources and capabilities that facilitate the generation of both incremental and radical innovations.